What happened
Is the tech-stock trouncing over?
It surely felt that way to many investors on Friday, as they witnessed strong gains with some of the sector’s major titles. Two bucking the recent downward trend of their grouping gained nicely on the day. Apple (AAPL 2.45%) finished Friday nearly 2.5% higher, while both publicly-traded share classes of Google parent Alphabet (GOOG 5.20%)(GOOGL 5.11%) enjoyed a more than 5% rise.
So what
Savvy investors know that a bear market is an ideal time to buy quality companies. Since stocks within a sector can frequently more or less move in concert, a great number of once high-flying techies have come down considerably in price.
Despite the devotion they’ve inspired among investors (and, in Apple’s case, users), both Apple and Alphabet have hewed to this rule, and are not exceptions. Both companies’ stocks are down by roughly 20% this year. That, by the way, is worse than the just-under-18% slide of the bellwether S&P 500 index.
Yet even a superficial analysis of Alphabet’s and Apple’s businesses shows that the two tech industry mainstays are powerhouses in their respective segments, with excellent growth considering how long they’ve been on the scene. It feels inevitable, then, that bargain-seekers would pounce on both once their respective share prices dipped low enough.
Now what
That level of tolerance seems to have been reached, but we should be cautious here. There is still much to be concerned about with the wider global economy. And while fears of a deep recession seem a bit exaggerated, the world has to navigate a stack of challenges in the near to midterm future.
That said, even with a tighter economy, advertisers are unlikely to sharply cut their spending on Google ads, while consumers should continue to find a way to pay for Apple’s enduringly popular phones, tablets, and premium apps.
